The process of preparing a tax return requires a taxpayer to locate the relevant tax return data to be entered in the tax forms. Failure to locate the relevant tax return data can be costly to a taxpayer. If the taxpayer files a tax return using erroneous or incomplete data, he or she may incur penalties and interest for filing an inaccurate tax return. If the taxpayer postpones filing of the tax return until the relevant tax return data can be located, the taxpayer may be required to file a request for an extension of time to file the tax return. If the taxpayer prepares his or her own tax filings, he or she will be required to take extra time to prepare and file the request for the extension of time—time that could be spent locating the tax return data. If the taxpayer uses a professional tax preparation service for his or her tax filings, he or she may be required to pay a fee for a professional to prepare and file a request for an extension of time. Finally, if the taxpayer completely misses the filing deadline for the tax return or the request for the extension of time because the appropriate tax return data cannot be located, the taxpayer risks criminal penalties.
Typically, relevant tax return data is provided to taxpayers on paper forms. To ensure the availability of the data when the taxpayer is ready to prepare and file a tax return, the taxpayer must store the forms in a secure location that is readily accessible. However, finding such a location, and remembering where it is, can be difficult for taxpayers who move or travel frequently. There is a chance the forms will simply be lost during a transition. Furthermore, for these taxpayers, there is a possibility the paper forms will never be received because the forms were sent or delivered to the wrong address.
The advent of computers and electronic storage media has made the processes of storing tax return data and of preparing and filing tax returns easier. Once tax return data is entered and saved on a computer system, it is easily retrieved so that a tax return may be prepared by referring to the electronic tax return data. In many instances, the tax return data is entered and stored by the taxpayer on his or her own computer. For example, many taxpayers use spreadsheets or other programs to record data that is used in preparing a tax return. Using a spreadsheet a taxpayer may record interest and dividend income that is received throughout the tax year. Alternatively, the taxpayer may simply record total W-2 income amounts, 1099 amounts, etc. when related paper statements are received at the end of a tax year. In either case, relevant tax return data is entered and stored so that the taxpayer may retrieve it easily and refer to it when he or she is ready to prepare his or her tax return. In some instances, the taxpayer may cut and paste the data from one computer application into a tax preparation program.
More recently, tax return data is being entered and stored electronically for taxpayers so they may access it at their convenience. For example, some employers are now storing tax return data such as W-2 data at a web site and then providing their employees with access to the tax return data at the web site. Also, many financial institutions now store at web sites tax return data, such as 1099 data, that their customers may access at any time from any location.
There are many benefits to electronically storing tax data for taxpayers. First, the cost for companies providing such information may be reduced because the companies are not required to print and mail paper statements to taxpayers. Furthermore, storing tax data electronically is more reliable than sending paper forms because access to the data is location independent so that taxpayers who move or travel frequently can access their information from their current location. Because the information is stored electronically, it is accessible at any time from any location. Finally, for taxpayers who prefer to collect and store their own tax data, they may access the various sites where their tax data are stored and download the data to their computers, for example, in a local spreadsheet so that all of the tax data are available in one convenient location.
Although the availability of electronically stored tax data reduces the time it takes for taxpayers to locate and collect tax data at tax time, taxpayers must still prepare their own tax returns or arrange to have their tax returns prepared in order to comply with taxing authority filing requirements. Taxpayers must check for the availability of their tax data at a web site or other computer location or they must watch for notices from employers, financial institutions, etc. regarding the availability of tax data. Taxpayers, therefore, would benefit from a service that monitors for the availability of tax data and arranges for the preparation of a tax return without further action on the part of the taxpayer. There is a need for a tax preparation system and method that takes advantage of the availability of electronically stored tax data that may be accessed by a tax preparer to complete a tax return and that further monitors the availability of electronically stored tax data so that a tax return may be prepared and filed for taxpayer in a timely manner.